Outsourcing

Abstract

Now days more and more companies are utilizing outsourcing to manufacture their products. Many times this is the most cost efficient to produce goods. Companies can outsource within the same country or in a different country. For example, Nike, Inc. is known for its use of outsourcing for foreign countries. Many of their shoe products are made in Mexico and then shipped here. Outsourcing to different countries is not uncommon. There are many call centers for companies located in India and many eastern countries.

Outsourcing

Outsourcing is the process of contracting a business function to someone else. Companies utilize this method to save a considerable amount of money. They will not have to employ employees and offer them benefits and they can minimize their expenses. The companies can also focus strictly on business operations. A large amount of resources and attention, which otherwise will require the attention of upper level management can now be used for more important, broader issues within the company. If a company is looking to expand, outsourcing is one of the most cost-effective ways to start building foundations in other countries. Although outsourcing provides many advantages, there are also drawbacks as well.

IBM

International Business Machines Corp. (IBM) is known for being the outsourced by many companies. In 2003, IBM was the number one computer maker. IBM has outsourced computers to be used at many companies, universities, common businesses. IBM made a deal with an auto part maker by the name of Visteon Corp. Under this deal IBM was to take over majority of the computer operations. According to an article by John Hechinger, “under the deal with Visteon, IBM will get a variable monthly fee depending on how many services Visteon uses” (Hechinger, 2003, IBM Gets $2 Billion Outsourcing Job --- Most Computer Operations Of Visteon to Be Taken Over As It Diversifies From Ford, para.6). IBM is a perfect example of a company that is used...